Litigation Release No. 21782 / December 16, 2010

Washington, D.C., December 16, 2010 — The Securities and Exchange Commission today charged Jonathan Star Bristol, attorney for former financial advisor Kenneth Ira Starr, with aiding and abetting Starr's multi-million dollar fraud by allowing Starr to use Bristol's attorney trust accounts to mask the misappropriation scheme. Beginning in November 2008 through Starr's arrest in May 2010, more than $25 million of Starr's clients' funds flowed through Bristol's attorney trust accounts. Throughout that time, Bristol was a partner with a prominent international law firm.

The SEC's amended complaint, filed in federal court in Manhattan, alleges that Bristol repeatedly allowed Starr to use Bristol's attorney trust accounts as conduits when Starr stole money from his advisory clients. Starr would transfer, without authorization, clients' funds into the attorney trust accounts, and then Bristol, who was the sole owner of the trust accounts, would transfer the stolen funds to, among others, Starr and two Starr-controlled entities — Starr Investment Advisors LLC and Starr & Company LLC. The account documentation for the attorney trust accounts was sent directly to Bristol's home address. Bristol received monthly statements for the attorney trust accounts, which clearly listed the names of Starr's clients as the source of the incoming transfers. Bristol never disclosed the existence of the accounts to his law firm. Bristol did, however, tout his relationship with Starr to his colleagues and others, even claiming that Starr managed $70 billion in assets, when in fact Starr managed a fraction of that amount.

The SEC further alleges that, when confronted by one of Starr's victims about an unauthorized $1 million transfer from the victim's account, Bristol lied to the victim that the funds were being bundled with other clients' funds for an investment with UBS Financial Services. In fact, Bristol had already used the misappropriated funds to pay a multi-million dollar legal settlement with one of Starr's former clients. Bristol subsequently sought to represent that same victim in connection with the SEC's investigation.

The SEC previously charged Starr, Starr Investment Advisors and Starr & Company (together, the "Starr Parties") with using misappropriated client funds to, among other things, buy a multimillion dollar luxury condominium on Manhattan's Upper East Side, and with violating securities laws pertaining to investment advisers' custody of clients' assets. The SEC's original complaint also named two relief defendants in order to recover client assets now in their possession: Diane Passage, who is Starr's wife, and Colcave, LLC, a Starr-controlled entity through which Starr purchased the apartment.

Today's amended complaint charges Bristol with aiding and abetting the Starr Parties' violations of Sections 206(1) and 206(2) of the Investment Advisers Act of 1940. The SEC is seeking permanent injunctions, disgorgement of ill-gotten gains with pre-judgment interest and financial penalties.

Sanjay Wadhwa, Maureen F. Lewis, Timothy Casey and Sandeep Satwalekar, all members of the Market Abuse Unit in New York, and George O'Kane of the New York Regional Office conducted the SEC's investigation, which is continuing. The SEC's litigation effort will be led by Todd Brody. The SEC thanks the U.S. Attorney's Office for the Southern District of New York, the New York County District Attorney's Office, and the New York Office of the Internal Revenue Service's Criminal Investigation Division for their assistance in this matter.